| News Room |
| FIs restructure
Rs. 800-cr loan of Essar Power |
| Indian Express
, August 30, 2002 |
Santanu
Ghosh |
|
In what can be termed as
a major respite for Essar Power Limited, financial institutions
led by IDBI and ICICI, have restructured Rs 800 crore loan
component of Essar Power.
According to sources, in terms
of reducing its fixed costs, Essar Power has renegotiated
all its term loans carrying high interest rate due to the
prevailing conditions in 1994-95 when the interest rates
were as high as 19 per cent. |
FI sources said that the
arrangements have been worked out in a manner such that
the FI would extend the maturity period of the term loans
to the tune of Rs 800 crore thus helping the company to
reduce its interest rate by an average of 5 per cent. The
two main FIs in the consortium, IDBI and ICICI, have decided
to extend the maturity period of the loans till 2012. "The
bunch of term loans, which Essar Power had availed consisted
of various tranches each having different maturity periods.
Now with the present restructuring all the loans would
mature around 2012", an IDBI official said. As per
the power purchase agreement (PPA) Essar Power, in turn,
has decided to pass on the benefit of the reduction in
the interest costs to Gujarat Electricity Board (GEB) and
Essar Steel. Esasar Power currently supplies 300 MW of
power to GEB and 215 MW to Essar Steel.
When contacted officials
in Essar Power confirmed the recent restructuring by the
FIs. According to sources, in view of the reduction in
the interest costs, the cost of power to GEB would come
from Rs 4.30 per unit to approximately Rs 3 per unit. This
implies a reduction of about 30 per cent in the tariff
and would result in an annual benefit of Rs 150 crore per
annum to GEB. In other efforts to bring down the cost of
power, Essar Power has also signed up to buy natural gas
as a replacement for its liquid fuel- naptha since natural
gas is much cheaper as compared to naptha. |
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